Several high-profile hedge fund managers are attempting to set up their own firms, despite a year of underperformance for the industry.
Managers including ex-Gartmore employee Guillaume Rambourg, former Barclays Capital commodities trader Todd Edgar and Sutesh Sharma, a senior proprietary trader at Citi are amongst those trying to raise capital for new businesses.
The launch schedule remains busy as managers leave established institutions and go it alone in the hope of earning even greater rewards. Institutional hedge fund pay was down in 2011 as many managers missed their targets.
"Now we see a lot of launches from people coming out of hedge funds where they have run established funds or part of the portfolio in a hedge fund format," said Lisa Fridman, head of European Research at Pacific Alternative Asset Management Company, which invests in start-up funds.
Rambourg is set to launch Verrazzano Capital in Paris later this month and intends to use over $500m of funds to bet on equities.
Thierry Lucas, formerly at Eton Park Capital Management, is set to launch Portland Hill Capital with $500 million for an event-driven and equity long-short fund.
Emerging markets focused Falcon Edge Capital, set up by ex-Blue Ridge Capital and ex-Eton Park Capital traders, is also understood to be entering trading.
U.S. regulations clamping down on banks trading with their own capital has led many banks to close proprietary trading desks. Goldman Sachs has abandoned the process, encouraging some of its star traders to set up their own businesses.
Debutants without the backing of a big institutional manager face a battle to survive. Almost three-quarters of the $70 billion investors put into the hedge funds in 2011 flowed to managers running more than $5 billion, according to Hedge Fund Research data.